The 1% Remittance Tax for H-1B and F-1 Families: Which Transfers Home Pay It and Which Don't

Since January 1, 2026, a 1% federal tax applies to some money you send home, and whether you pay it depends on how you fund the transfer, not on your visa.

Part of our guide to US taxes on F-1, OPT and H-1B.

Status as of November 1, 2026: in effect. The 1% remittance tax is a federal excise under Internal Revenue Code section 4475 on money you send abroad when you pay for the transfer with cash, a money order, a cashier's check or a similar physical instrument. It has applied since January 1, 2026. A transfer you fund from a US bank account or a US-issued debit or credit card falls outside it, whether you use your bank's wire page, Wise or another app. The provider collects the 1% when you send, and your visa status does not change the answer.

Not settled yet: proposed regulations (REG-114499-25, published 2026-04-13) are not final, and bills to raise the rate, H.R. 5595 (15%) and H.R. 8995 (25%), are introduced and referred only.

Common misconception: "There is no US tax on sending money home." That was true before 2026, and older articles still say it.

Correction: the IRS Instructions for Form 720 (revised 06/2026) say, under IRS No. 155: "The 1% remittance transfer tax applies to certain remittances when the sender makes the transaction with cash, a money order, a cashier's check, or a similar physical instrument."

What is the 1% remittance tax?

The 1% remittance tax is a federal excise on money transfers from a sender in the United States to a recipient in another country, made after December 31, 2025. The sender owes it, the transfer provider collects it, and it applies only when the transfer is funded with cash, a money order, a cashier's check or a similar physical instrument.

Section 4475(a) reads: "There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer." Section 4475(b) says the tax "shall be paid by the sender with respect to such transfer," and requires the provider to collect it and remit it to the Treasury quarterly. Full text: 26 U.S.C. 4475 on Cornell LII.

The key definitions come from the Electronic Fund Transfer Act at 15 U.S.C. 1693o-1(g):

• A remittance transfer is an electronic "transfer of funds requested by a sender located in any State to a designated recipient" that a provider initiates.
• A designated recipient is "any person located in a foreign country." Money sent to someone inside the US is not a remittance transfer.
• A remittance transfer provider is "any person or financial institution that provides remittance transfers for a consumer in the normal course of its business": banks, credit unions and money-transfer companies, including those whose storefront agents take cash.

Remittance tax 1%: which transfers pay it, and which don't?

Only transfers you pay for with a physical instrument: cash, a money order, a cashier's check or something similar (section 4475(c)). Section 4475(d) separately excepts transfers funded from an account at a covered financial institution and transfers funded with a debit or credit card "which is issued in the United States."

Funding method and the 1% remittance excise, as of 2026-11 (sources: 26 U.S.C. 4475; IRS Form 720 instructions, IRS No. 155)

The payout side does not matter. Your mother can collect cash at a counter in Hyderabad or receive a bank deposit; what counts is how you paid on the US end.

Does the remittance tax apply to Wise or bank transfers?

Not when you fund them from a US bank account or a US-issued card. The excise follows the funding method, not the brand: one company can run a cash counter in a corner store and an app that pulls from your checking account, and only the cash transfer is taxed. An international wire from your own bank account is excepted for the same reason. If a tax or excise line appears on a bank-funded quote, ask the provider why before you confirm.

What about prepaid cards, app wallets and other gray areas?

The statute lists its funding types and stops, and the proposed regulations are not final. Two details in the text matter:

• Prepaid cards. Section 4475(e) borrows the Electronic Fund Transfer Act's debit-card definition "without regard to" the clause that adds general-use prepaid cards (15 U.S.C. 1693o-2(c)(2)). On our reading, a prepaid card therefore does not get the US-card exception.
• Multi-step arrangements. Section 4475(f) is an anti-conduit rule. It treats a remittance transfer in a multiple-party arrangement involving the sender as a financing transaction for the IRS conduit rules (section 7701(l)), so running cash through extra steps does not settle the answer.

If cash goes onto a prepaid card or app wallet before you send, ask the provider how it treats the transfer, and keep the receipt.

Who collects the 1% remittance tax, and do you file anything?

The provider collects it when you send, makes semimonthly deposits and reports it quarterly on Form 720 under IRS No. 155. As a sender you do not file Form 720. If the tax is not paid at the time of the transfer and the provider did not collect it, the statute makes the provider liable.

In release IR-2025-102 (October 7, 2025) and Notice 2025-55, the IRS told providers they could avoid deposit penalties for the first three quarters of 2026 if they "make timely deposits, even if they are incorrectly calculated" and pay any shortfall by the Form 720 due date (IRS remittance tax penalty relief). That relief was for providers, covered only January through September 2026, and never changed what a sender owes.

Does your visa status change whether you pay it?

Not under current law. An F-1 student, an OPT or STEM OPT worker, an H-1B or L-1 employee, an H-4 spouse, a green card holder and a US citizen all face the same rule as of November 1, 2026. The only question is how the transfer is funded. (One pending bill would change that; see the rate section below.)

Most other money rules do turn on status or residency. Our overview of how H-1B status affects your US taxes covers income tax, and the substantial presence test guide explains when you flip from nonresident to resident.

Which money rules depend on your status, as of 2026-11

Whether an account of yours in India belongs on an FBAR is a separate test, covered in our guide to FBAR and FATCA reporting for visa holders and on the IRS FBAR page.

Take excise questions to a tax professional who works with nonresident returns; your DSO handles SEVIS and OPT matters, not this. An immigration attorney is the right call only if a money question touches a petition or your status.

Is there a tax on sending money to India from the US?

Yes, in one situation. Since January 1, 2026, a 1% federal excise applies when you pay for the transfer with cash, a money order, a cashier's check or a similar physical instrument. Fund it from a US bank account or a US-issued card and the US charges no excise.

The destination makes no difference: India, China, Nepal and every other country are treated alike. The funding test is also the same whether the money goes to your parents or to your own NRE or NRO account (our reading of the definitions).

Money coming the other way is different. When your parents send money from India, or you move your own savings into a US account, the sender is not in a US state sending to a recipient abroad, so the excise definitions do not fit. Our guide to moving foreign savings to the US covers that direction. India's rules for the person receiving money are a question for a chartered accountant in India.

Gift tax is a separate question from the 1% excise

The excise is charged on each qualifying transfer, whatever the amount. Gift tax is a different system aimed at larger gifts, with a 2026 annual exclusion of $19,000 per recipient ($194,000 for gifts to a spouse who is not a US citizen), according to the IRS tax year 2026 inflation adjustments. Paying the 1% settles no gift-tax question, and staying under $19,000 does not remove the 1% from a cash transfer.

Gift tax has its own residency test. The IRS FAQ on gift taxes for nonresidents not citizens treats a non-citizen who did not reside in the US when making the gift as a nonresident, and for those donors the tax reaches "real and tangible property situated in the United States." That is not the income-tax substantial presence test, and how a cash gift is treated depends on your facts, so ask a tax professional before relying on either answer. Gift returns go on Form 709 (IRS gift tax page). For money flowing the other way, see our guide to Form 3520 and gifts from parents abroad.

A worked example with 2026 dates

Meera, a hypothetical sender, was on STEM OPT in Dallas until her H-1B change of status took effect on 2026-10-01. Everything she sends goes to her father in Pune.

• 2026-01-15: she pays $800 in cash to a transfer agent at a neighborhood store. The excise applies: $8 (our arithmetic, 1% of $800), and her receipt should show it.
• 2026-04-10: she sends $800 through an app funded from her US checking account. No excise.
• 2026-06-12: she wires $20,000 from her checking account for a family medical bill. No excise, but her 2026 total to her father now passes the $19,000 gift exclusion, a question for a tax professional.
• 2026-10-01: her H-1B status begins. The excise rule does not change. Her student FICA exemption ends, which is a separate rule.
• 2026-10-20: she pays for a $1,000 transfer with a money order. The excise applies: $10.

Had Meera paid cash for $1,500 every month, the excise would have totalled $180 for the year (our arithmetic). Funding from her bank account takes that to zero. The exchange-rate markup and transfer fee are separate costs to compare on every quote.

How to send money home from a bank account or card

1. Open a checking account at a US bank or credit union if you do not have one.
2. Link that account, or a debit card issued in the US (not a prepaid card), in your provider's app, or use your bank's international wire page.
3. Choose the bank account or US card as the funding source on the quote screen. Your family can still collect cash or receive a deposit abroad.
4. Check the quote for a tax or excise line before you confirm.
5. Save each receipt (date, amount, recipient, fee and exchange rate) in one folder.
6. Total your transfers per recipient for the calendar year and compare each total with the $19,000 gift exclusion for 2026.
7. Ask a tax professional who handles nonresident and dual-status returns if a total passes $19,000 or you are unsure where you reside for gift-tax purposes.

Will the remittance tax go up to 15%?

Not under current law. As of November 1, 2026 the rate is 1%, and the two bills that would raise it are only introduced and referred to the House Committee on Ways and Means.

• H.R. 5595, the Requiring Excise for Migrant Income Transfers Act (REMIT Act), introduced 2025-09-26 by Rep. John McGuire, would raise the rate to 15%. As introduced, it would also exempt senders whom a qualified provider verifies as US citizens or nationals, so citizenship would start to matter (bill text on govinfo; our reading).
• H.R. 8995, introduced 2026-05-21 by Rep. Chip Roy, would raise it to 25% and strike the subsections that limit the tax to cash-type funding and except bank-account and US-card transfers, so bank-funded transfers would be taxed too (bill text on govinfo; our reading).

Neither has passed the House or the Senate. The 119th Congress ends at noon on 2027-01-03, and bills not enacted by then die. A claim that "the remittance tax is now 15%" is wrong as of November 1, 2026.

Before 2026 vs now: what changed for transfers home

Old rule, new rule and what to do, as of 2026-11

Common mistakes

• Believing there is no US tax on sending money home. Since 2026-01-01 there is one, at 1%, on cash, money order, cashier's check and similar funding.
• Thinking cash pickup triggers it. The recipient's payout method is irrelevant; your funding method counts.
• Assuming visa status matters. Under current law citizens are not exempt and students are not singled out.
• Mixing up the excise and gift tax. Each has its own rules; satisfying one says nothing about the other.
• Assuming any card works. The exception names cards issued in the United States, and its debit-card definition leaves general-use prepaid cards out.
• Trusting rate-hike headlines. H.R. 5595 and H.R. 8995 are introduced and referred only.

Frequently asked questions

Who pays the 1% remittance tax?

The sender owes it, and the remittance transfer provider (the bank, money-transfer company or its agent) collects it when you send and reports it to the IRS on Form 720 under IRS No. 155. Since January 1, 2026 it applies only to transfers funded with cash, a money order, a cashier's check or a similar physical instrument. As a sender you do not file a separate return for it.

Does the remittance tax apply to Wise or bank transfers?

Not when you fund the transfer from an account at a US bank or credit union, or with a debit or credit card issued in the United States, because section 4475 excepts those. The funding method decides it, not the brand of the service. As of November 1, 2026 the 1% applies only to cash, money order, cashier's check or similar physical-instrument funding.

Is there a tax on sending money to India from the US?

Since January 1, 2026 the US charges a 1% federal excise on transfers to India and every other country when you pay for the transfer with cash, a money order, a cashier's check or a similar physical instrument. A transfer funded from your US bank account or a US-issued card carries no excise. Gift-tax rules for large gifts and India's rules for the person receiving the money are separate questions.

Does my visa status change whether I pay it?

Not under current law. Section 4475 turns on how the transfer is funded, not on citizenship, immigration status or tax residency, so F-1 students, OPT and H-1B workers, H-4 spouses, green card holders and US citizens are treated the same as of November 1, 2026. Your status does matter for other money rules, such as FBAR reporting and gift tax. H.R. 5595, which would exempt verified US citizens and nationals, is only introduced and referred.

Will the remittance tax go up to 15%?

Not under current law. As of November 1, 2026 H.R. 5595 (15%) and H.R. 8995 (25%) are only introduced and referred to committee, and neither has passed the House or the Senate. As introduced, H.R. 8995 would also tax bank- and card-funded transfers. Bills not enacted before the 119th Congress ends at noon on January 3, 2027 die and would have to be reintroduced.

Sources

• 26 U.S.C. 4475, tax on remittance transfers (Cornell LII)
• 15 U.S.C. 1693o-1, remittance transfer definitions and 15 U.S.C. 1693o-2, debit card definition (Cornell LII)
• IRS, Instructions for Form 720 (06/2026), IRS No. 155
• IRS, penalty relief for remittance transfer providers
• IRS, tax year 2026 inflation adjustments
• IRS, gift tax and gift tax FAQ for nonresidents not citizens
• IRS, FBAR
• H.R. 5595 and H.R. 8995 (govinfo)

How we checked this: on 2026-11-01 we read section 4475 and the EFTA definitions it borrows, the Form 720 instructions (06/2026), the IRS penalty-relief release, the IRS gift-tax and FBAR pages, and the full text of both bills on govinfo. Where we interpret statute or bill text, the post says "our reading".

This is general information, not legal or tax advice; your own receipts and a tax professional who handles nonresident returns govern your situation.

Sending money home is one part of building a life on a visa; a job that sponsors it is the other. If you want help finding roles with employers that hire OPT and STEM OPT workers and sponsor H-1B visas, talk to F1Jobs.